DISSERTATION REPORT ON COMPARATIVE STUDY OF DISTRIBUTION CHANNEL OF ‘HUL’ AND ‘PROCTER & GAMBLE’ IN RURAL MARKET

A Dissertation submitted in partial fulfillment of the requirements of Masters in Business Administration – International Business
Submitted to: Ms. Poorva Ranjan Lecturer, AIBS Submitted by: Pranita Singh MBA (IB & Marketing) Section – C A1802009448

Amity International Business School Amity University, Noida April, 2011

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CERTIFICATE

This is to certify that Ms. PRANITA SINGH, a student of Post Graduate Degree in MBA International Business (2009-2011), Amity International Business School, Noida has carried out this Dissertation Project TITLED – “COMPARATIVE STUDY OF DISTRIBUTION CHANNEL OF ‘HUL’ AND ‘PROCTER & GAMBLE’ IN RURAL MARKET”, under the able guidance and supervision of MS. POORVA RANJAN, Faculty at AMITY INTERNTIONAL BUSINESS SCHOOL. This Dissertation report has the requisite standard for the partial fulfillment the Post Graduate Degree in International Business. To the best of our knowledge no part of this report has been reproduced from any other report and the contents are based on original research.

Ms. POORVA RANJAN (Faculty Guide)

PRANITA SINGH (Student)

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ACKNOWLEDGEMENT
Every endeavor in itself is an impression of the efforts of not only those who pursue it but of those as well who provide guidance and motivation towards its successful completion. Likewise, this project bears an imprint of all those who helped me at various stages and it would be unfair on my part not to thank them. I would like to express my gratitude to PROF. DR. GURINDER SINGH, DIRECTOR GENERAL, AIBS for providing me with an opportunity to undergo this dissertation project at AIBS. The successful completion of this project could not have been possible without the cooperation and encouragement of MS. POORVA RANJAN, my project guide, who provided me with her unending support from the very beginning of the project, which helped in timely completion of the project. I would also like to thank all the my Marketing faculty members at AIBS, MS. KOKIL JAIN, MS. NIDHI BHATIA & MR. NITIN GARG for enlightening my way whenever any kind of support was required in completion of the project. I’d also express my gratitude towards my father, MR. C.P.SINGH who continued to have an impact on my thinking which helped me to complete this project.

THANKS & REGARDS, PRANITA SINGH

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CHAPTER 4 DATA ANALYSIS. DISTRIBUTION NETWORK OF HUL ……………….TABLE OF CONTENTS CHAPTER 1 EXECUTIVE SUMMARY……………………………… COMPANY PROFILE (HUL)…………………………. FINDINGS …………………………………... DISTRIBUTION NETWORK OF P&G ………………... CHAPTER 7 REFERNCES……………………………………………………… 4 .. CHAPTER 2 CRITICAL REVIEW OF LITERATURE………………………… CHAPTER 3 RESEARCH MATHODOLOGY…………………………………. SWOT ANALYSIS OF HUL…………………………… COMPANY PROFILE (P&G)…………………………. CHAPTER 5 RECOMMENDATION CHAPTER 6 ANNEXURES……………………………………………………..

touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. In another recommendation the suggestions towards better dealer interest in HUL products has been given a chance. the neighborhood stores. The Company’s products are sold in over 180 countries around the world primarily through mass merchandisers. which serve consumers in developing markets. The laundry category constituted approximately 16% of net sales during fiscal 2009.CHAPTER 1 Hindustan Unilever Limited EXECUTIVE SUMMARY Hindustan Unilever Limited (HUL) is India’s largest Fast Moving Consumer Goods Company. is focused on providing branded consumer goods. membership club stores. Procter & Gamble The Procter & Gamble Company. The main recommendations have been made on the addressing of the advertising message to the customers. and Household Care. They endow the company with a scale of combined volumes of about 4 million units and sales of Rs. one product category accounted for 10% or more of consolidated net sales. An attempt has been made to formulate the communication in a way to build it on a platform of the basic need for buying HUL products. Health and Well-Being. emerging marketing plans and understanding companies business strategy with its profile. Hence. research aims is that to study the existing marketing practices.10000 crores. 5 . During the fiscal year ended June 30. incorporated in 1905. drug stores and in high-frequency stores. 2009 (fiscal 2009). The research is based primarily on secondary data. grocery stores. it has been recognized as a Golden Super Star Trading House by the Government of India. the Company was organized into three Global Business Units: Beauty. HUL is also one of the country’s largest exporters. Data has been collected through administered questionnaires by using online survey method. In fiscal 2009.

Surf Excel. Brooke Bond. HUL believes that an organization’s worth is also in the service it renders to the community.10. Sunsilk. Unilever. and now has facilities in Mumbai and Bangalore. HUL is also one of the country's largest exporters. Kissan. Kwality Wall's – are household names across the country and span many categories . Lux.000 suppliers and associates. and rural development. Lakme. ice cream and culinary products. Fair & Lovely. HUL is focusing on health & hygiene education. It is a mission HUL shares with its parent company. They are manufactured over 40 factories across India.The Company had six business segments under United States Generally Accepted Accounting Principles (GAAP): Beauty. Grooming. HUL's distribution network comprising about 4. most recent being the 6 . personal products. branded staples. Pond's. and personal care with brands that help people feel good. Rin.000 redistribution stockists. is to "add vitality to life. tea. which holds 51.55% of the equity. touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. Pepsodent. HUL has traditionally been a company.like Lifebuoy. The rest of the shareholding is distributed among 380. care for the destitute and HIV-positive. covering 6. Fabric Care and Home Care.000 crores. and about 250 million rural consumers. it has been recognized as a Golden Super Star Trading House by the Government of India. Wheel. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of Rs. look good and get more out of life. Snacks. detergents. It is also involved in education and rehabilitation of special or underprivileged children. coffee. The operations involve over 2. HINDUSTAN UNILEVER Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods Company. HUL's brands . and water management. The Hindustan Unilever Research Centre (HLRC) was set up in 1958. Coffee and Pet Care. The mission that inspires HUL's over 15." HUL meets everyday needs for nutrition.soaps. and Baby Care and Family Care. HUL has also responded in case of national calamities / adversities and contributes through various welfare measures. including over 1.3 million retail outlets reaching the entire urban population. which incorporates latest technology in all its operations. hygiene.000 employees. Clinic. many with post-doctoral experience acquired in the US and Europe. Close-up. Health Care. HLRC and the Global Technology Centers in India have over 200 highly qualified scientists and technologists. women empowerment. Knorr-Annapurna.000 individual shareholders and financial institutions.300 managers.

000 women entrepreneurs in its fold. Shakti aims to have 100. If Hindustan Unilever straddles the Indian corporate world.000 villages. The vision is to make a billion Indians feel safe and secure. it is because of being single-minded in identifying itself with Indian aspirations and needs in every walk of life.000 Shakti entrepreneurs covering 500. Shakti. By the end of 2010. touching the lives of over 600 million people. thereby improving their livelihood and the standard of living in rural communities. and relief & rehabilitation after the Tsunami caused devastation in South India. HUL is also running rural health programmers – Lifebuoy Swasthya Chetana.000 villages and directly reaching to 150 million rural consumers. 7 . The programme endeavors to induce adoption of hygienic practices among rural Indians and aims to bring down the incidence of diarrhea. HUL is creating micro-enterprise opportunities for rural women. Through Shakti. Shakti also includes health and hygiene education through the Shakti Vani Programme. In 2001.village built by HUL in earthquake affected Gujarat. It has already touched 70 million people in approximately 15000 villages of 8 states. The program now covers 15 states in India and has over 31. reaching out to 100. the company embarked on an ambitious programme. and creating access to relevant information through the iShakti community portal.

BRANDS 8 .

Executive Director 5. Mr. S. Harish Manwani Mr. Mr. Mr. C.Organizational Structure:1. Directors I. Chair Man 2. A. Finance & IT Director 4. Parekh V. S. Sanjiv Kakkar II. Ramadorai Mr. K. Narayanan IV. Narayan III. Mr. Mr. V. Prahalad VI. Mr. D. R. CEO & Managing Director 3. Nitin Paranjpe Mr. Gopal Vittal 9 . Sridhar Mr.

HINDUSTAN COMPANY UNILEVER LIMITED INDIA’S LARGEST FMCG FINANCIAL OVERVIEW 10 .

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Corporate Social Responsibility 12 . and the environment on which we have an impact. The code also supports our approach to governance and corporate responsibility. consumers and the environment. organisations and environments our business touches has always been at the heart of our corporate responsibility. our commercial operations and relationships.Purpose & principles Our corporate purpose states that to succeed requires "the highest standards of corporate behaviour towards everyone we work with. the communities we touch. It's underpinned by our code of business Principles which describes the operational standards that everyone at Unilever follows. through voluntary contributions. aligned to our own Code of business principles. and through the various other ways in which we engage with society. Continuous commitment We're also committed to continuously improving the way we manage our environmental impacts and are working towards our longer-term goal of developing a sustainable business." Always working with integrity Conducting our operations with integrity and with respect for the many people. Setting out our aspirations Our corporate purpose sets out our aspirations in running our business. Working with others We want to work with suppliers who have values similar to our own and work to the same standards we do. Our Business partner code. Positive impact We aim to make a positive impact in many ways: through our brands. wherever they are in the world. comprises ten principles covering business integrity and responsibilities relating to employees.

000 Shakti entrepreneurs in rural areas across 15 states in 100. HUL has developed appropriate capabilities to be globally competitive in cost and quality for a viable Exports business. nutrition. HUL is India's largest exporter of branded Fast Moving Consumer Goods. HUL’s Export: It was 1962. It is a sourcing base for Unilever brands in Home & Personal Care (HPC) and Tea for supplies to other Unilever companies. reduction of greenhouse gases and water footprint by integrating these objectives into our brands. It has been recognized by the Government of India as a Golden Super Star Trading House.HUL’s corporate responsibility strategy seeks to address HUL's most significant sustainability impacts of hygiene. our people and our processes.  Provided income-generating opportunities to 45.  Exceeded the target of reducing CO2 emissions from manufacturing operations by 25% on a base of 2004  Twenty Eight of our manufacturing sites are zero water discharge sites. Over time. The reality of India then was very different from what it is today. enhancement of livelihoods. It also focuses on 13 . Focus areas: HUL's Exports focuses on two broad areas. Hindustan Unilever voluntarily decided to take up Exports to support the country's economy. Today.000 villages through Project Shakti  Lifebuoy Swasthya Chetna has touched 12crore people in more than 50676 villages across India since 2002  Pureit is available in more than 1500 towns nationally and already covers over 3 million households across India. India's economy then suffered from foreign exchange shortage.

Pepsodent. at present. Lipton Brisk. Australia. HUL is the only source of Pears soap across the world. HUL enjoys international recognition within Unilever and outside for its quality. Lipton. Shogun. countries in Asia. as a country. the world's third largest seafood company. and instant tea for Unilever's ready-to-drink tea business. The branded teas are Brooke Bond. Signal. Lifebuoy. HLL's Marine Products brands are Ocean Diamond. Dove. ranging from Surimi. Close-Up. skin care products and oral care products. Africa. Hima. Lipton Green Label. In addition. Tara and Prima. Ocean Excellence. The brands are Lux. Fair & Lovely. HUL’s Export Portfolio: HPC: The categories are soaps. Lipton 3-in-1 premix. reliability and speed of customer service. HUL has also become a part of Unilever's supply chain in sea foods for Europe too. Chinese Rickshaw. Gold Seal. Lipton Yellow Label. TEA: The categories are branded packet tea. Castor and its Derivatives and Rice.Marine Products. Pears. Rice: 14 . has competitive advantage . HUL's Exports geography comprises. Among its customers is Icelandic. Vaseline. Brooke Bond Taj Mahal. Brooke Bond Red label. Crabsticks to Shrimps and several value-added products. Marine products: HUL offers a comprehensive portfolio.becoming a preferred supplier to both non-Unilever and Unilever clients in three categories in which India. North America and Europe.

The categories are Basmati Rice and Basmati Rice-based ready-to-eat rice meals. hold it in good stead. cosmetics. and Specialty Castor Oils (USP grade. paints and surface coatings. 12 Hydroxyl Stearic Acid. BP grade. HUL's Castor brand is Topsoil.330. like hydrogenated castor oil. The brands are Gold Seal Indus Valley. emulsifiers). process competitiveness and economies of scale both at the company and country level.000 15 . They position the company to become one of the hubs for sourcing by Unilever companies in HPC and Tea. Today. and also simultaneously become a preferred partner to global customers in Marine Products. Casto : The categories are Castor Oil. Ricinoleic Acid (used in grease and lubricant industry. Direct Selling: Product Range • Lever home range • Male grooming • Oral Care • Ayurveda • Personal Wash • Foods Reach . Exports is a substantial business in HUL. HUL believes that its competitive advantages of cost competitiveness.1400 towns (Largest in India) Consultant base . Castor-oil based products. DAB 10) etc used in pharmaceutical preparations. accounting for about 12% of the company's turnover. Rozana and Annapurna.

Channel Design 4. Initiatives taken for channel member management. Field force management 1. with the company salesman as the consignee. This system helped in transshipment. 5. therefore. The salesman then collected and distributed the products to the respective wholesalers. and as a stockpoint to minimise stock‐outs at the RS level. The highlight of the third phase was the concept of "Redistribution Stockist" (RS) who replaced the RWs. Large retailers also placed direct orders. Transportation & Logistics 3." a stock point for the company's products in that market. The company salesman grouped all these orders and placed an indent with the Head Office. one wholesaler in each market was appointed as a "Registered Wholesaler. The second characteristic of this period was the establishment of the "Company Depots" system. In order to achieve this.DISTRIBUTION NETWORK OF HUL We have analyzed the distribution network of HUL from the following aspects: 1. The RS was required to provide the distribution units to the company salesman. The C&FA system has also resulted in 16 . He then distributed stocks from the Registered Wholesaler through distribution units maintained by the company. The first phase of the HUL distribution network had wholesalers placing bulk orders directly with the company. Evolution of HUL’s distribution network 2. The company salesman still covered the market. Goods were sent to these markets. The C&FAs act as buffer stock‐points to ensure that stock‐outs did not take place. In the recent past. The Registered Wholesaler system. increased the distribution reach of the company to a larger number of customers. The focus of the second phase. canvassing for orders from the rest of the trade. bulk breaking. and the money was remitted to the company. which comprised almost 30 per cent of the total orders collected. which spanned the decades of the 40s. was to provide desired products and quality service to the company's customers. against cash payment. a significant change has been the replacement of the Company Depot by a system of third party Carrying and Forwarding Agents (C&FAs). Evolution over Time The HUL’s distribution network has evolved with time.

maintaining favorable trade relations. reporting sales and stock data.000 suppliers and associates serve HUL’s 40 manufacturing plants which are decentralized across 2 million square miles of territory. 2. extending indirect coverage. covering 6. Each business of HUL portfolio has customized the network to meet its objectives.cost savings in terms of direct transportation and reduced time lag in delivery. It has developed customer management and supply chain capabilities for partnering emerging self‐service stores and supermarkets. Detailed overview: The distribution network of HUL is one of the key strengths that help it to supply most products to almost any place in the country from Srinagar to Kanyakumari. kiosks and general stores. The general trade comprises grocery stores.3 million retail outlets reaching the entire urban population. implementing promotional activities. providing innovative incentives to retailers and organizing demand generation activities among a host of other things. providing warehousing facilities. The most obvious function of providing the logistics support is to get the company’s product to the end customer. This includes. Around 2. providing service to retailers. Hindustan Unilever provides tailor made services to each of its channel partners. providing manpower. demand simulation and screening for transit damages. The role performed by the Redistribution Stockists includes: Financing stocks. The most important benefit has been improved customer service to the RS. 17 . chemists. and about 250 million rural consumers. wholesale. Distribution System of HUL: HUL's products are distributed through a network of 4. There are 35 C&FAs in the country who feed these redistribution stockists regularly.000 redistribution stockists.

through 6000 sub‐stockists.The team comprises an exclusive sales force and exclusive redistribution stockists. In rural India. In the 25% of the accessible markets with low business potential. To service this segment. HUL appointed a Redistribution stockist who was responsible for all outlets and all business within his particular town.000 under one rural sales organisation.The team focuses on building superior availability of products.(Schematic of HUL’s Distribution Network) Distribution at the Villages: The company has brought all markets with populations of below 50.000 villages. HUL approached the rural market with two criteria ‐ the accessibility and viability. This sub‐stockist distributes the company's products to outlets in adjacent smaller villages using transportation suitable to interconnecting 18 . the network directly covers about 50. HUL assigned a sub stockist who was responsible to access all the villages at least once in a fortnight and send stocks to those markets. reaching 250 million consumers.

The most common form of trading remains the grassroots buy and sell mode. company vans were replaced by vans belonging to Redistribution Stockists.roads. which serviced a select group of neighbouring markets. Thus. suitably incentivising them to distribute company products. Distribution at the Urban centres: 19 .Under the Indirect Coverage (IDC) method. HUL launched this Indirect Coverage (IDC) in 1960s. scooters or the age‐old bullock cart. This enables HUL to influence the retailers stocks and quantities sold through credit extension and trade discounts. Hindustan Unilever is trying to circumvent the barrier of motorable roads. (Rural Distribution Model of HUL) The company simultaneously uses the wholesale channel. like cycles.

Tamil Nadu.000. commonly referred as 'Shakti Amma' receives stocks from the HUL rural distributor.000 villages . Project Shakti has already been extended to about 12 states ‐ Andhra Pradesh. Gujarat. From the C & F agents. Project Shakti had enabled Hindustan Lever to access 80. Maharashtra and West Bengal. Armed with micro‐credit. After being trained by the company. armed with training from HUL and support from government agencies concerned and NGOs. Punjab.750 per month) taking micro‐credit from banks. Chattisgarh. New distribution channels Project Shakti This model creates a symbiotic partnership between HUL and its consumers. Started in the late 2000. which they will then directly sell to consumers. 20 . Orissa. Each Shakti entrepreneur usually service 6‐10 villages in the population strata of 1. Generally the manufacturing site is located such that it covers a bigger geographical segment of India. The following two diagrams show the Project Shakti model as initiated by HUL. The model consists of groups of (15‐20) villagers below the poverty line (Rs. Uttar Pradesh.000‐2.HUL's partnership with Self Help Groups(SHGs) of rural women. is becoming an extended arm of the company's operation in rural hinterlands. Madhya Pradesh. a member from a SHG selected as a Shakti entrepreneur. the Shakti entrepreneur then sells those goods directly to consumers and retailers in the village. women from SHGs become direct‐to‐home distributors in rural markets. and using that to buy our products.Distribution of goods from the manufacturing site to C & F agents take place through either the trucks or rail roads depending on the time factor for delivery and cost of transportation. Karnataka.000 of India's 638. In general. the goods are transported to RS’s by means of trucks and the products finally make the ‘last mile’ based on the local popular and cheap mode of transport. The respective state governments and several NGOs are actively involved in the initiative. Rajasthan. The SHGs have chosen to partner with HUL as a business venture. The Shakti entrepreneurs are given HUL products on a `cash and carry basis.

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the Star Seller sells everything from detergents to personal products. the goods are distributed from C & F Agents to Rural Distributors (RD). the distribution network directly covers as of now about 40 per cent of the rural population. As a result. Project Streamline being a cross functional initiative.Project Streamline To cater to the needs of the inaccessible market with high business potential HUL initiated a Streamline initiative in 1997. The sub‐stockists then perform the role of driving distribution in neighboring villages using unconventional means of transport such as tractor and bullock carts. Higher quality servicing. in terms of frequency. is to be provided to rural trade as part of the new distribution strategy. Each of these sub‐stockists / star sellers is located in a rural market. who has 15‐20 rural sub‐stockists attached to him. The diagram in the next page shows the model of Project Streamline. credit and full‐line availability. Under Project Streamline. 22 . Project Streamline is an innovative and effective distribution network for rural areas that focuses on extending distribution to villages with less than 2000 people with the help of rural sub‐stockists/Star Sellers who are based in these very villages.

one of the fastest growing in India today. It presents a range of customised offerings in Home & Personal Care and Foods. This is possible because of IT connectivity across the extended supply chain of about 2. Each of them has a minimum number of JIT depots attached for stock requirements. Certain C&FAs were selected across the country to act as mother depots. factories. It already has about several lakh consultants ‐ all independent entrepreneurs. HLN has already spread to over 1500 towns and cities. an innovative step has been the formation of the Mother Depot and Just in Time System (MD‐JIT). The JITs draw their requirements from the MD on a weekly or bi‐weekly basis. Leveraging Information technology HUL customers are serviced on continuous replenishment. The New Compensation plan for HLN partners provides new exciting ways of earning substantial income in addition to offering rewards like revenue sharing through the innovative concept of “pools” Mother Depot and Just in Time System In order to rationalise the logistics and planning task. 80 factories and 7. All brands and packs required for the set of markets which the MD and JITs service in a given area are sent to the mother depot by all manufacturing units. All these initiatives together have enhanced operational efficiencies. trained and guided by HLN's expert managers. which supports the units across the country. backed by 42 offices and 240 service centres across the country. This sophisticated network with its voice and data communication facilities has linked more than 200 locations all over the country.Hindustan Lever Network (HLN) It is the company's arm in the Direct Selling channel.000 suppliers. branch offices. depots and the key redistribution stockists. including the head office. RS Net Initiative: 23 . They have also combined backend processes into a common Shared Service infrastructure.000 stockists. covering 80% of the urban population. improved the service to the customers and have brought us closer to the marketplace.

RS Net has come as a force multiplier for HUL Way. RS Net is one of the largest B2B e‐commerce initiatives ever undertaken in India. information sharing and monitoring. HUL is servicing the rural market. “Project Leap. RS Net is part of Project Leap. The IT‐powered system has been implemented to supply stocks to redistribution stockists on a continuous replenishment basis. key urban outlets. launched in 2001.The RS Net initiative. aims at connecting Redistribution Stockists (RSs) through an internet based system. the company's action‐plan to not only maximise the number of outlets reached but also to achieve leadership in every outlet. It now covers stockists of the Home & Personal Care business and Foods & Beverages in close to 1200 towns and cities. and optimizing planning and scheduling. despatches. and integrating demand and distribution planning with 24 . Adexa iCollaboration suite In 2000. the sales system gets to know every day what HUL stockists have sold to almost a million outlets across the country. This ensures HUL’s growth by ensuring that the right product is available at the right place in the right quantities and at the right time in the most cost‐ effective manner. live customer /supplier collaboration. enables monitoring of stocks and secondary sales and optimises RS’s orders and inventories on a daily basis through online interaction on orders. Today. HUL chose the Adexa iCollaboration suite for facilitating centralized monitoring of the SCM. This in turn has unshackled the field force to solely focus on secondary sales from the stockists to retailers and market activation. and the modern trade as a single concern. Information on secondary sales is now available on RS Net every day. HUL identified improved supply chain management as a critical business priority and launched a comprehensive initiative. Simultaneously. Together they account for about 80% of the company's turnover. Project Leap begins with the supplier runs through the factories and depots and reaches up to the RSs. It has also enabled RSs to provide improved service to retail outlets. Leap also aims at reducing inventories and improving efficiencies right through the extended supply chain. reducing inventory buffers. It provides linkages with the RSs’ own transaction systems. RS Net has enabled stockists to place orders on a Continuous Replenishment System.” tasked with increasing supplier/distributor responsiveness.

With the aggregated view of data provided by the iCollaboration suite. Direct Selling Channel in the name of Hindustan Lever Network (HLN). Its focuses on Product availability. Regular (traditional) retail channel. which resulted in significant savings on the cost side for inventories and distribution. HUL was able to combine sales and distribution efforts on the diverse product lines. HUL has a well entrenched high distribution model which comprises of C&FAs.production scheduling. Channel Design Hindustan Lever Limited (HUL) has two types of channel selling ‐ i. Hindustan Unilever's distribution network is recognized as one of its key strengths. ii. and higher levels of brand experience 25 . shipments and customer orders on a daily basis with these software packages and can get a pulse on the market real time. 3. Brand communication. wholesalers and retailers (as shown earlier). Redistribution Stockists. HUL updates inventory positions.

Initiatives taken to Improve the Distribution Network HUL has taken the following initiatives to improve its distribution network: • Setting up of a full‐scale sales organisation comprising key account management and activation to impact. fully engage and service modern retailers as they emerge. HUL’s distribution network in rural India already directly covers about 50. • Revamping of its sales organisation in the rural markets to fully meet the emerging needs and increased purchasing power of the rural population. Backend processes have been combined into a common Shared Service infrastructure.000 villages. • Launching of Project Shakti through which the company is able to extend its operations in villages. • Servicing Channel partners and customers with continuous daily replenishment.. • Delayering of sales force to improve response times and service levels. 4. • Implementation of supply chain system that connects stockists across the country.000 sub stockists. • Leveraging scale and building expertise to service Modern Trade and Rural Markets. all company sites and stretching right up to stockists. reaching about 250 million consumers through about 6. 26 . HUL has also included several NGOs and state governments as the initiative helps rural women to improve their financial position. and also includes a back‐end system connecting suppliers. IT tools have been deployed for connectivity across the extended supply chains.

weekly markets (haats). it has started the ‘Vijeta ‐ Rishta Jeet Ka’ scheme last year to provide a platform for the wholesaler and HUL to grow the business by earning points and redeeming them. to boost up traditional retail in the face increasing in‐roads made by large. This is to protect & maintain the competitive advantage that HUL has over its biggest competitors in the other markets (e. particularly in rural areas by leveraging non‐conventional media like wall paintings.000 stockist salesmen. Started in 2003. modern retailing chains like Spencer’s. • Undertaking several initiatives for traditional channels in order to improve its capabilities at the front‐end by developing skills for stockists' sales force. • Finding out Innovative ways to reach out to its consumers. Under 'Project Dronacharya'.000 consultants across the country.• Launching of HUL Network to leverage the channel of direct selling by presenting customised offerings in 11 home and personal care and food categories. in line with the strategy to leverage the equity of its brands through relevant services. fairs and festivals. P&G). the FMCG major continuously imparted training to over 10. • Initiating the concept of Super Value Stores (SVS) in urban areas to partner traditional stores to provide a range of services ranging from managing their inventory to setting up POS (point of sale) banners. • Starting of franchised Lakme Beauty Salons and Ayush Therapy centres to offer standardised services. with its very deep distribution reach through traditional retail. 5.. cinema vans. • Launching the Unicare scheme with upmarket pharmacies and retailers to sale its premium brands. Field Force Management 27 . it already has a base of 300.g. HUL started restructuring some of the selected SVSs into the form of self‐service retail shops a la modern retails. For instance. • Launching of several promotional schemes for existing wholesalers and distributors. In addition to this. Reliance Fresh etc (where HUL is squeezed harder for discounts).

the company makes sure that the operating area of each field member doesn't overlap with his other colleagues. the field force is evaluated using QOC (Quality of Contribution). In HUL. FCS (Max Points = 0.The working cycle of a typical HUL field force member is from 21st of every month to the 20th of the next month.5) 4.5) 28 . During this period he is given various targets that helps to achieve company objectives and gives him a chance to prove his performance relative to other. Secondary Sale (Max points = 2.5) 2. There are various methods used by the company to incentivize the field force ‐ Monetary and Non Monetary. While deciding the area for each member of the field force. It consists of 4 components ‐ 1.5) 3. To start with the field force member is given a particular area and his responsibility is to cater to all the retailers in that area. Focus (Max points = 0. Eco (Max points = 0.

The following is a typical ECO target assigned to a field force agent: • • • • Lux International – 105 outlets x 1 SKU Pears Soap ‐ 135 outlets x 1 SKU Rin ‐ 104 outlets x 1SKU Breeze Soap ‐ 100 outlets x 1 SKU The outlets mentioned are within the operating area of the person and 1 SKU = Rs.5 which is added to his QOC score. each member is given a specific target in terms of value (e. The concerned agent receives this target around 25th of each month and has to complete this target within the 5 th day of next month. If he achieves 100% of the target he gets 2. A typical ‘Focus’ target is given below: • • • • Lux International – Rs 20.000 /‐ @ Rs 10/‐ per unit Breeze Soap ‐ Rs 27.5 points.640 /‐ @ Rs 6/‐ per unit Life Buoy ‐ Rs 70. Field Capability Score (FCS) ‐ In this component. 27/‐. if he achieves 95% target he gets 1. he looses the opportunity. Upon completion he gets additional 0.. Focus / Depth Pack target – This is mainly used to increase the sales volume of certain products. However if this is not met within 5th.5 points which is then added to his overall QOC score. the field force persons are required to ensure that the scheduled visit/outlet billing is such that at least 15 items are demanded per order.000 /‐ @ Rs 10 /‐ per unit This target needs to be achieved within 20th of next month. Upon achieving the target the field person is awarded 0. If this is achieved the retailer gets a discount of 1% on the billed amount and on the other hand the field person gets an additional score of 0. These points are used to add to the total QOC score as well as linked to monetary incentive.5 points. For example if there are 100 outlets within the operating area of a field 29 . Rs. ECO / Width pack Target – This is used for the penetration/reach of certain products in the existing market. Based on this the Field person calculates number of packs he should sell to the retailers. 15 lacs) for the operating month (21st – 20th of next month).5 points added to his QOC score along with monetary incentive associated with it.Secondary Sale ‐ Based on the operating area. Each scheduled visit per outlet is one per week.220 /‐ @ Rs 10/‐ per unit Wheel ‐ Rs 99.g.

5 – The person is eligible for 3 star award In the event of exceptional performance. Each field person is given a palmtop wherein he can feed the entries on the spot where the transaction is done. 30 . b) The sold item is immediately updated in the company information system. Target Setting Mechanism and monitoring The regional office monitors the performance of various zones. The photograph of the award winners is displayed in the office as a source of inspiration for other sales person. The sales person is required to achieve 90% success rate to get 0. management representatives from the regional office come to the zonal office to distribute the awards. Based on the QOC various awards are distributed to the field persons at the end of every month. MOC stands for Monthly operating Cycle. These awards are also known as ‘MOC Star’ awards.5 points for his QOC score and at least 65% for a satisfactory performance. A thorough analysis is done at the end of each month and based on that the weak products are identified or those for which the demand has weakened. Non Monetary Methods The other purpose of the QOC scores is to highlight the performance of the field person among his peers. This solves basically the two purposes ‐ a) The field person is freed from the tedious task of maintaining cumbersome records and can then concentrate on the job (thus IT is replacing some of the field force or other channel members). • • • If QOC score > 4.5 – The person is eligible for 7 star award If QOC score > 4 – The person is eligible for 5 star award If QOC score > 3.person then the number of visit per week is 100 and total number of visit per month = 100x4 = 400. This is the basis of setting ECO and FOCUS targets for the field persons.

•Integrated supply chain and well spread manufacturing units •Distribution structure with wide reach. Opportunities: Growing consumer base due to increasing income levels and new consumers from lower strata of the society • Untapped market in branded Ayurvedic medicines and other such consumer products.SWOT ANALYSIS OF HUL Strengths: •Distinctly placed products providing reach to every segment of society. •Well placed to take advantage of growth in rural India and lower strata of the society through “Shakti”. •Competitors focusing on a particular product and eating up HUL’s share. reducing profitability. •It can be a leader in exports by positioning itself as a sourcing hub for Unilever companies in various countries. •Access to Unilever global technology. • Opportunity in Food sector: changing consumer tastes • Expansion of horizons towards more and more countries • Threats: Unfavourable raw material prices due to inflation. • 31 . capability and sharing of best practices from other Unilever companies. • Heavy onslaught of competition in the core categories from emerging players like ITC will result in higher advertising expenditure • Spurious/counterfeit products in rural areas and small towns. Weaknesses: •Price positioning in some categories allows for low price competition like Amul captured Kwality’s market. high quality coverage – The launch of project “Shakti” has helped HUL to create brand awareness and extensive reach in rural India. •Limited success in changing eating habits of people. like Nirma focusing on soaps and detergents.

including Fusion. Pringles. Tide. Iams. beauty. P&G's biggest buy in company history was Gillette in late 2005.PROCTER & GAMBLE The Procter & Gamble Company (P&G) boasts boatloads of brands. Olay. The company also makes pet food and water filters and produces soap operas. Pampers. The world's #1 maker of household products courts market share and billion-dollar names. Charmin. Some 25 of P&G's brands are billion-dollar sellers. and Wella. It's divided into three global units: health and well being. Gillette. P&G shed its coffee brands in late 2008. Always/Whisper. Downy/Lenor. among others. Pantene. Being the acquisitive type. Bounty. and household care. BRAND 32 . Braun. with Clairol and Wella as notable conquests. Crest.

Fabric Care.We attract and recruit the finest people in the world. Surface Care Baby Care and Baby Wipes. Pharmaceuticals Snacks and Pet Pet Food. Bath Tissue. our shareholders. Batteries. Paper Towels Actonel. 33 . Dawn. and the communities in which we live and work to prosper. Charmin. Home Appliances Head & Shoulders. Always. allowing our people. Facial Tissue. Dish Home Care Care. Skin Care Blades and Razors. P&G Values: P&G is its people and the values by which we live. Face and Shave Products. profit. promoting and rewarding people without regard to any difference unrelated to performance. $16.7 Crest. Olay.3 Downy. Oral Care. $37. As a result.3 BEAUTY Beauty Grooming Cosmetics. Pantene. Wella Braun. Electric Hair Removal Devices. Pringles Ariel. Hair Care. Gain. We build our organization from within. Pampers P&G Purpose: We will provide branded products and services of superior quality and value that improve the lives of the world's consumers. Duracell. Personal Health Care. consumers will reward us with leadership sales. and value creation. Mach3 HEALTH AND WELL-BEING Health Care HOUSEHOLD CARE Feminine Care. Prestige Fragrances. Gillette. Personal Cleansing.P&G at a glance: GBU Reportable Segment Key Products Billion-Dollar Brands Net Sales by GBU (in billions) (1) $26. Snacks Care Fabric Care and Air Care. Oral-B Iams. Tide Bounty. Family Care Diapers. Fusion. Deodorants. We act on the conviction that the men and women of Procter & Gamble will always be our most important asset.

customers. treating the Company's assets as our own and behaving with the Company's long-term success in mind. We focus our resources to achieve leadership objectives and strategies. and help others improve their effectiveness. We all act like owners. We are data-based and intellectually honest in advocating proposals. We operate within the letter and spirit of the law. and consumers.Leadership: • We are all leaders in our area of responsibility. • • • Ownership: • We accept personal accountability to meet our business needs. Passion for winning: • • • We are determined to be the best at doing what matters most. We are honest and straightforward with each other. including recognizing risks. We have a healthy dissatisfaction with the status quo. • Integrity: • • • • • We always try to do the right thing. We have a compelling desire to improve and to win in the marketplace. with a deep commitment to deliver leadership results. We uphold the values and principles of P&G in every action and decision. improve our systems. 34 . We have a clear vision of where we are going. Trust: • We respect our P&G colleagues. and treat them as we want to be treated. We develop the capability to deliver our strategies and eliminate organizational barriers.

A key piece of the acquisition beyond Gillette's product lines was its distribution network and supply chain. has worked to complement P&G's own distribution network. Trends and Forces Different product price points provide some insulation against recession Household staples are somewhat protected from the US recession and global economic downturn. In 2004. in a recession consumers often turn to cheaper private label or store brands instead of "brand name" products from P&G. P&G offers at least two product forms in many product categories. Gillette generated over $10 billion in sales. As part of the deal. For example. which was moved into the Health & Well-Being segment. about $6 billion of which came from razors and Duracell and Braun products and the remainder sourced from the Oral-B brand. Gillette's distribution network and supply chain in emerging markets had been extremely successful for Gillette and. 2008. Gillette Acquisition Procter & Gamble acquired Gillette in 2005 for over $50 billion in its largest acquisition to date. We believe that people work best when there is a foundation of trust. In addition.5 percent stake in Smuckers and the company will assume $350 million of Folger's debt.95 billion. the company has seen increases sales in Luvs from Pampers diapers and an increase in Gain detergent sales from Tide.. P&G offers "Basic" versions of its Charmin toilet paper and Bounty paper towels. The 35 . P&G shareholders will receive a 53. P&G sold its Folgers coffee unit to J. To combat private label encroachment. once acquired. the last full year before the acquisition. Smucker Co for $2. However. Business Growth Folgers Sale On June 4.• • We have confidence in each other's capabilities and intentions.M.

From 2003 to 2008. combined with the necessity of household items. sales of Target's private label products rose an average of 15% annually. the top 10 food retailers in the US increased their share of food retail sales from 53. For example. Rise of Private Labels In the past decade. A decision by Wal-Mart not to sell a particular P&G consumer product would prevent P&G from reaching its entire target market.4% to 58.9%. Large retailers are close to the consumers. Wal-Mart offers 5. which has increasingly sold as consumers feel the recession squeeze on their disposable income. Wal-Mart. which directly compete with P&G products. In addition. Retail Consolidation The rise of a handful of powerful low-priced retailers has negatively impacted consumer products companies. Wal-Mart has exerted its power over other suppliers to their detriment in the past. Target. the company's largest customer. Retailers also promote their own brands as they earn higher margins on them.company's broad offerings. Social Responsibility: 36 . These strengths contribute to better private label product development. P&G has addressed this issue by continuously investing in Research & Development and introducing new products as well as offering different versions of its own products at different price points. P&G has faced stiff competition from private label brands or "store brands" of large retailers such as Wal-Mart. from 1999 to 2004. These large retailers have shifted the balance of power within the supply chain. have the point of sale data on consumer behavior and are in better position to understand consumer behavior. Private label products often sell at lower price points and earn higher margins because the retailers can control the cost of their production.500 products through its "Great Value" brand. For example. 2007. provide a degree of insulation against recession. such as forcing record companies to produce clean-label CDs and pulling adult magazines. many retailers have pushed their own higher margin private label brands in competition with P&G. and supermarket chains. accounted for 15% of net sales in 2006. and 2008. For example. A handful of big retailers have captured a large share of the market.

At P&G, Social Responsibility stems from our Corporate PVP (Purpose, Values, Principles). Social Projects are in keeping with P&G’s credo of ‘Business With a Purpose’. P&G has always demonstrated its commitment to the community not just through the quality of its products and services, but also through socially responsible initiatives for the community. We believe in building the community in which we live and operate by supporting its ongoing development.

PROJECT SHIKSHA: P&G with CRY & Sony launches “Shiksha” to help educate Underprivileged Children Each time you buy a P&G product, you help support one day’s education of one child Did you know that India not only has the world’s largest number of children but also the world’s largest number of children who are unable to access education? With a mission to make a difference to this alarming situation, Procter & Gamble (P&G) has joined hands with India’s premier child rights organisation Child Relief and You (CRY) and Sony Entertainment Television to launch ‘Shiksha’, a program to help educate underprivileged children across India. Under Shiksha, P&G and Sony will appeal to their consumers and viewers to support the cause and make it easy for them to do so - all an individual has to do is purchase a large pack of either Tide, Ariel, Pantene, Head & Shoulders, Rejoice, Vicks VapoRub or Pampers during April, May and June 2005, and he/she will help support one day’s education of one child per pack purchased. Irrespective of the sale of its brands from Shiksha, P&G has committed a minimum of Rs. 1 crore to CRY, which will be allocated by CRY to projects with a focus on education, spread across India; Delhi, Barrackpore (West Bengal), Ongole and Chilkaluripet (Andhra Pradesh), Bellary (Karnataka), Salem (Tamil Nadu), Bolangir (Orissa), and Osmanabad, Wardha, Navi Mumbai, Borivali (Maharashtra).

GUJARAT EARTHQUAKE RELIEF:
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P&G in partnership with Swayam Shikshan Prayog (SSP) opened four Community Resource Centers for the earthquake victims in the Chakasari, Paggivand, Hanjiya and Jodhpar vands (hamlets) of Rapar Taluka, Kutch District, Gujarat. The Community Centers provide basic education for children; training on building earthquake-resistant shelters and has supported the formation of 22 Women's Savings Groups which contribute towards an income-generating fund, for future entrepreneurial activity. The P&G-SSP project positively impacts 25 villages, 3750 families and 22,500 people and helped mobilize women’s groups and communities in Gujarat for their long-term sustainable development. Credit fund will be provided as a revolving fund to selfhelp groups. The operational cost for each Centre is Rs, 25,000 met by P&G. The centers have been built from a Gujarat Earthquake Relief Fund created after the earthquake of 26th January 2001 by employees of P&G India, Brussels, Japan, Canada, among others and the Company contribution. P&G employees also made contributions directly to the Red Cross Society for other rehabilitation work in Gujarat. In addition, P&G is currently working on forming women’s micro-credit groups to ensure the sustainability of these community centers and to further empower these women and increasing the number of community centers from four to seven.

PROJECT POSHAN: P&G and UNICEF launched Project Poshan to combat malnutrition in India. India has 40% of the world’s malnourished children. POSHAN targeted three key projects: an Adolescent Girls’ Initiative to educate girls in Mumbai slums on health problems and improve their lives with Anemia prevention through IFA tablets; a Women’s Parenting Network in Chennai to provide information on care during pregnancy; and Day care projects in Jaipur, which focused on increased food intake and micro-nutrients. Once again, P&G raised Rs. 50 lakhs by contributing Re. 1/- from sales of large size packs of Ariel, Whisper, Head & Shoulders and Pantene sold in the months of May, June and July 2000.

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PROJECT PEACE: P&G launched PEACE – a unique Environmental Education Program for children in schools across Bombay and Thane representing a cross-section of economic backgrounds. Children were exposed to a fascinating account of the Indian environmental scenario. The Multiplicity of EcoSystems in India, Air Around Us, Water, Solid Waste and Adopting Conservation in our Lifestyles were the topics dealt with using interesting media like music, games, project-work, slides, video films, group discussions, etc.

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The exact product variant. because if the product is not immediately available. consumers were not satisfied when they looked on the shelf for the products they wanted. The second moment of truth depends on the buyer’s satisfaction when consuming the product. This was especially important for promotional items. Responsibility for having the product on the shelf every time a shopper wants it used to be seen as purely a matter for the retailer. a world leader in consumer packaged goods. P&G was ahead of the pack in realizing the significance of this. But. If retailers got their forecasts wrong and ordered the wrong volumes. P&G decided that sophisticated demand chain management. Something had to be done. Detailed consumer surveys in July 2000 told P&G that in 55% of cases (75% for promotional items). the consumer usually moves on to buy a rival product. in the size and packaging the shopper sought. both the manufacturer and the retailer were losing.DISTRIBUTION CHANNEL OF P&G Procter & Gamble. It has sales of $40 billion a year and 130 manufacturing sites around the world. P&G measures consumer satisfaction at two levels. or is not. forecasting and replenishment) and VMI (vendor-managed inventory) programs. at the end of the day. sells nearly 300 brands in more than 160 countries. was available less than half the time. or at least not concerned about it. This is a critical moment. the manufacturer was not aware of the problem. because of the cost of merchandising and promotional activities. available. which it calls the two “moments of truth. and the long-term negative impact of stock-outs on consumers. Top managers in P&G began to realize that the company’s supply network needed to be reengineered so that it was genuinely responsive to consumer demand. establishing direct connections between sales and supply chain 40 . though other manufacturers are now also focusing on the end consumer.” The first moment of truth occurs when the consumer reaches the shelf and finds that the desired product is. After customers have been unable to buy the desired product and have switched to alternatives. which is one reason why the industry is seeing so many new CPFR (collaborative planning. it becomes hard to persuade them to return to buying the initial product when they go shopping again.

which P&G calls its “consumerdriven supply network” (CDSN) program. because of the large amounts of money involved in marketing programs. new techniques. • • • Reaction times across the supply network have been compressed. and new technology 41 . Problems for P&G and Suppliers: For the major consumer packaged goods manufacturers. • As consumers come to expect a greater assortment of product options. however much demand is stoked up. to improve product availability. involving retailers. Optimizing supply chain performance demands a radical new look at the way the partners in the supply network collaborate. New thinking. a multi-level initiative was launched. Current processes cannot move fast enough to deliver what retailers need. inside and outside the organization. responsive supply networks that will link together sales and supply processes. Promotional items are the highest priority. Supply decisions require timely. As a result. driving up service level expectations. P&G’s aim has been to create adaptive. If manufacturers cannot deliver the product. These trends are already beginning to eliminate the safety stocks that used to be held in reserve in the retail supply network. could be the key to maintaining its leading position in the consumer packaged goods industry. the strategies that are currently being pursued by the world’s most competitive retail chains are changing the game in two important ways. detailed information that is not usually available today. • Cash requirements are creating pressure for shorter order-to-delivery cycles and a move towards flow-through distribution networks. retailers are responding with greater product differentiation. especially for promotions. they lose all the growth that should be generated by their marketing promotions. This situation creates several new problems that P&G and other manufacturers need to come to terms with. This will allow it to develop demand chain management capabilities.business processes. manufacturers and service providers.

P&G’s vision of a consumer-driven supply network has two essential elements. An adaptive. if necessary within hours. because batch processing windows soon narrow right down. Main requirements for successful network collaboration: P&G has identified the main requirements for successful network collaboration under four headings: • The potential to move large volumes of data fast: Data should be handled automatically. alert. • • • P&G is working with its IT suppliers to develop additional functionality and to resolve the scalability problems inherent in most new applications. based on real-time data from the stores. evaluate and. without needing to be transformed or translated on arrival. o o Building collaborative supply chains at several levels (local market and global Ensuring that manufacturing sites serving both local and global supply networks markets. 42 . dynamic approach that uses new business applications to monitor. The ability to establish connections quickly on demand. for example). trigger action. Enhanced back-up and recovery strategies for all the systems involved: The technical challenges cannot be ignored. This is especially critical if these harmonized business applications are going to be deployed on a global scale. But it has also learned the value of assembling and making a firm commitment to a small group of technology partners for such an ambitious global project. where appropriate. are highly responsive to changes in demand.

and CO2 through systemic conservation efforts. we strive to reduce waste. b) Finished Product Logistics: In the logistics stage. water. ranging from manufacturing to finished product logistics. We apply smart ecodesign through innovative construction process improvements. and we engage our suppliers throughout the process.Basic distribution channel of P&G: Operations & suppliers: P&G’s Sustainability work goes beyond the core of our manufacturing operations. And. and 43 . extending to a holistic end-to-end view of opportunities. giving new life to what was once waste. We deliver strong results across the supply chain. a) Manufacturing: Between the procurement of raw materials and the creation of a product. we re-use where feasible. we reduce waste in customization by applying more sustainable designs. We optimize transportation efficiency through a comprehensive multi-mode approach. energy.

But today. More Gains An intermodal program in Western Europe increases the use of trains in its distribution network. Pilot programs in Belgium and France have been operating since July 2008. An intermodal approach optimizes the transportation process. we’re shifting toward “intermodal” transportation. Transportation: For decades. has reduced transportation costs and improved Sustainability 44 . North America: Trucks and Trains Save Diesel A transport program in North America. that is.000 homes annually. And by shifting away from trucks and planes to boats and trains. using multiple forms of transport.000 metric tons per year—an amount equal to the CO2 produced by lighting more than 15. it saves fuel and reduces CO2 emissions. P&G’s first to incorporate an intermodal component combining trucks and trains. which uses shipping containers that transfer smoothly from one mode to another. c) Supplier Engagement: We collaborate closely with suppliers across the entire supply chain. reducing CO2 emissions without any trade-offs in customer service or cost. and each has removed up to 5. more than 90% of Western Europe’s finished product traveled on trucks. Our new Supplier Sustainability Board includes members from over 20 leading global suppliers and is charged with guiding the development of supplier-related Sustainability activities and goals. Before the effort. The pilots have reduced CO 2 emissions by more than 4.now go further by leveraging common “intermodal” containers across different modes of transportation. Examples: Western Europe: More Trains. covering over 2 million kilometers of roads. P&G has transported product in a “multi-modal” fashion.000 trucks per year from the roads. The intermodal program aims to increase rail transportation from 10% to 30% by 2015.

45 . Overall miles in North America have reduced by 12% since the 2007/2008 fiscal year.across the region. while the same volume of product has been delivered. Use of intermodal transport has increased by 30% saving 11 million liters of diesel fuel.

SWOT ANALYSIS OF P&G Strength  Leading Market Position  Diversified and innovative product Portfolio  Strong Finances in past years Opportunity  Developing Markets  Demographic trends across the world Weakness  Quality control Problem  Decreased Revenues in their Northeast Asian Market Threats  Competitors  Rising cost of energy prices  Economic slowdown in the US and Eurozone  New Regulations 46 .

Sai Prasanna Ragu. it still sees opportunity in reducing its worldwide inventory levels. have necessitated consumer goods industry giants to shift their attention from brand marketing and positioning towards a cross-functional focus. January 9. 2008 P&G’s Logistics Revolution: Co-creating Value Proliferation of products. This involved integration of their operations across the supply chain and delivery of the rights goods to the right place at the right time with the right operational costs.Logistics Management. That explains why the company is putting so much emphasis on emerging “multi-echelon” inventory management technology to keep inventory levels down and customer service high. their inability in rightly assessing consumer demand created market imbalance in the form of either excessive stocks or stock outs. 2009 HUL ready to streamline distribution network Hindustan Unilever Ltd (HUL). framework for selecting MEI tools. Muthu Kumar R. the country’s largest household and personal care products maker by sales is increasing its so-called go to market (GTM) initiative. retailers competed for winning customer attention and loyalty. 2/1/2008 Procter & gamble takes inventory up a notch Procter & Gamble is very much on top of its supply chain game. Contributing Editor -. IBS Case Development Centre. introduced in Mumbai last year. make it more proficient. HUL’s GTM initiative in Mumbai was aimed at rationalizing its distribution network. brands. P&G focuses on inventory optimization. The need to produce and deliver goods based on real demand made both manufacturers and retailers rethink/review their business relationships and co-create value for each other. Option as software partner. deliver stocks to retailers faster and reduce inventory on their product shelves. It farmed out the task of stock deliveries to logistics provider Mahindra Logistics as part of the Mumbai project. 47 . However. companies and even distribution channels and media. While manufacturers vied for significant shelf space. John Kerr. in an attempt to refurbish its national distribution network and streamline its supply chain.com NewsDesk.CHAPTER 2 CRITICAL REVIEW OF LITERATURE ShareGyan.

moving from 65% to 90%. The company has also realized a more equitable distribution of stocks with overall mal-distribution reducing from 19% to 6% of total volume transported. health. The Procter & Gamble Company (P&G) has followed three primary growth strategies: 1) focus on P&G's biggest brands. countries. Supply Chain Management Review. 2006 P&G's global supply chain starts with the consumer This study says that Procter & Gamble is dedicated to accelerating growth in developing markets but this strategy presents new challenges for the supply chain. logistics players are now seeking ways to address this issue as about $100 billion worth potential is latent 48 . ITC Ltd. V. indirect dispatches from finished goods warehouses have come down from a range between 70-80% to between 30-40% Harrison. Stock availability. Each of these strategies has contributed to P&G's ability to deliver top-line growth at or above the company's targets for the past five consecutive years. 2. The Adexa implementation has improved HLL’s proactive planning capability and manufacturing and distribution efficiency. 2007 Supply Chain Management Solution for Hindustan Unilever. and minimize the total supply-chain cost. in terms of volume. With over 70 per cent of the economy centred around the rural parts of the country. Keith. October 1. Direct dispatches from the factories to the wholesaler network have increased. Finally. has significantly increased. The solution has also helped the company gain visibility across its supply chain. Hyderabad .. and retail customers. Dec. Manual intervention has come down from 40% to sub-zero levels.Prahlad Krishnamurthi. The Hindu Business Line Logistics. October 4. 2) develop faster-growing. Since the beginning of this decade. measured in terms of Stock Service Index. highermargin businesses such as beauty. 2006. reduce distribution lead-time. manufacturing and infrastructure sectors are poised for rapid growth. supply chain in rural areas could be next big opportunity' This study says that As the Indian retail. Rishi Kumar. they are faced with new challenges when it comes to logistics and supply chain issues — particularly in the untapped rural areas for farm produce and delivery of goods and services. which have helped ensure a more responsive supply chain. and 3) serve more of the world's consumers by accelerating growth in developing markets. and home.

according to Professor Viswanadham.in the rural parts of the country. He is supposed to figure out how to get the consumer products giant's detergents. at the Indian School of Business. Executive Director of the Centre for Global Logistics and Manufacturing Strategies (GLAMS). 49 . Jake Barr is in charge of "supply chain innovation" at The Procter & Gamble Co. Tom Steinert-Threlkeld. 2004-07 Procter & Gamble: Delivering Goods This study says Procter & Gamble has streamlined its supply chain to put more of its products on store shelves when customers are ready to buy. soaps and personal care products into the hands of 5 billion customers in 170 countries more efficiently.

data collection method etc. Research design provides an excellent framework for the research plan of action. management or competitors. The Internet allows for research methods that are more interactive in nature Data collection method: The data collected for the research is Secondary data i. and responses are awaited. The questionnaire is been filled manually and sent to the different consumers and retailers . I am also using the scaling technique to assess the attitude of the customer. Research methodology overall includes the research design. Research Methodology helps in carrying out the project report by analyzing the various research findings collected through the data collection methods.CHAPTER 3 RESEARCH METHODOLOGY Research methodology deals with the various methods of research. which guides research in collecting and analysis the data. focus groups. 50 . projective methods. case studies or pilot studies. or qualitative approaches such as informal discussions with consumers. magazine etc. from internet. employees. and more formal approaches through in-depth interviews. research design is a blue print for the research study. Research instrument The instrument use for data collection is structured questionnaire. Question is open and close ended depending upon the information that needed to be elicited.e. The function of the Research design is to ensure that the required data is in accordance. The purpose of the research methodology is to describe the research procedure used in the research. For this research project exploratory method is used which often relies on secondary research such as reviewing available literature and/or data. Research design Research design is an important and the vital part of the research. books.

Scope The Indian FMCG market currently appears to be at a crossroads. Most of the people don’t understand the quality claims by HUL. however.The sampling procedure is systematic sampling. Success will largely be determined to the extent a company can differentiate itself in terms of intangibles that go with a Product”. Things are. Systematic sampling involves a random start and then proceeds with the selection of every kth element from then onwards. HUL grew from zero to the 2. success could well hinge on the best of bundle of services that HUL provides. Most of the claims are realistic and easy to understand. Systematic sampling relies on arranging the target population according to some ordering scheme and then selecting elements at regular intervals through that ordered list. The landmark achievement comes in 74 years in India after clinching its first overseas sale. mark and the number One FMCG company in India this year. if marketers are to do a better job of marrying what a HUL offers to the consumer’s image of the offerings. slowly changing and customers at the upper end of the market are now ready to pay more for more. Looking at the present scenario it can be said that though there is lot of competition in the market but HUL is picking up well. I took a sample size of approx. I hope that this approach will soon enter the new era.Sampling plan Keeping all the constraints in mind. 51 . and HUL are attempting to change customer perceptions of their brands and where specific buying motivations appear to be replacing generalities. comfort and safety. maybe not with the same intensity. “It’s smarter to think about emotions and attitudes. The mindset of the Indian consumer is such that he is delighted if he buys a pen a little cheaper than his neighbour.268 Million $. This meanwhile is quite unlike the west where buyers consider aesthetics. In this case. not necessarily in that order. Another important outcome of the research is the believability of the claims. Thus. before finalizing a purchase. 30 consumers and 15 retailers . k is (population size/sample size).

It does not cover all the aspects of the company. Subjective: This project only tells you what it is all about. 52 . 4.Limitations Everything in this world has its own advantages and disadvantages which shows ‘nothing is perfect’. 2. Low participation: Obviously many respondents have not participated in this and have also created some problems which simply shows that they were not interested. 3. Biasness: Sometimes interested customers were also biased so the collected figures involve both positive and negative figures. Some of the limitations are as follows: 1.

Arey usingH 'sproduct and also ou UL satisfied No Are you using HUL's product and also satisfied Yes 0% 50% 100% Hul Brand Awareness 53 .CHAPTER 4 CONCLUSIONS FINDINGS. PRODUCT LINE As From the study. They are as follows. I have reached to this conclusion on the basis of following findings. I concluded that Hindustan Unilever limited has more brands in its basket then Procter and gamble so it is more close to common man and touching his or her daily life in a more comprehensive manner. DATA ANALYSIS AND On the basis of research. we found that there is a nominal difference in the efficiency of Hindustan Unilever limited Vis-à-vis Procter and Gamble Ltd. PRODUCT SATISFACTION Most of the people (90%) are using the product of HUL and are very satisfied while only 10% consumers are not satisfied.

HUL spent Rs. 54 .HUL spends largest spender of money on advertisement in the India. In India. 76% population is residing in rural areas and their distribution channel is very week in rural India and consumers are not aware about the products of P&G. 650 crore on advertisements. Last year. DEALERS Both the companies use this type of selection criteria to select the dealers in any particular area. Procter & Gamble It does not have strong distribution channel in India.

Each dealer has to keep the Good Receipt Note (GRN) number and report of the whole items of delivered products. They are also using latest Information Technology to track there consignment whose backend is managed by infosys. 55 .Conclusion: Dealers of HUL are satisfied by the companies support in there sales because the company provides them with various schemes and discounts. Transportation cost is paid by P&G. Transportation cost is shared by HUL and the dealer. According to the senior officials of P&G it was found that it’s a volume based company. MODE OF TRANSPORTATION Hindustan Unilever limited: HUL uses modified trucks and rails to deliver the products from various production sites to the dealers. Procter and Gamble: P&G is also using road and railway transportation system to deliver product from various production sites to the dealers. They are using new state of the art technology so that they can even track every single bottle of shampoo. advertisement and the flexibility that the company provides them. whereas satisfaction of P&G dealers lies in good promotional activities. hence all the above stated parameters helps the dealer to attract more and more customers.

FLEXIBILITY Hindustan Unilever limited: As far as flexibility is concerned. he is supplied with the products in time.Conclusion: Both P&G and HUL uses advanced tracking technology to track the goods and both companies use railways and roadways for transporting their products. In HUL transportation cost is shared by HUL and the dealer. HUL has there own warehouses in every state and if the dealer orders more. 56 . our group found that P&G does not provides more flexibility in terms of delivery of produce and in taking order from dealers. transportation cost is paid by P&G. Procter and Gamble: As far as flexibility is concerned. where as at P&G. our group found that HUL provides more flexibility in terms of delivery of produce.

The new distribution system has given the company considerable 57 . rural and modern trade. mass retailers. Procter and gamble: Procter and gamble’s channel structure also have whole sellers. DISTRIBUTION CHANNEL STRUCTURE Hindustan Unilever limited: Hindustan Unilever limited channel structures consist of whole seller. mass retailers.Conclusion: our group has found that Dealers of HUL are more satisfied than the dealers of P&G and therefore HUL is a step ahead in terms of flexibility of placing orders and accepting orders from the dealers. They are revamping the company’s distribution system using efficient consumer response {E C R} principles. They are reinventing distribution—creating new channels and redefining the way current channels are serviced. They are building new capabilities in training the large number of people involved in these initiatives. Their new approach to distribution is holistic and seeks a three way convergence of product availability brand communication and brand experience.

If company feels that it is not the fault of the dealer then company would return it. HUL is also given emphasis on penetrating the rural market as well. Procter & Gamble: P & G replaces the damaged product with the new one. which increases the availability and presence of HUL product. it means that the damaged product are replaced by new product.cost and process efficiencies while significantly availability and visibility of the company’s product in the stores. DEALING WITH UNSOLD AND DAMAGED MERCHANDISE Hindustan Unilever Limited: It depends on the condition and type of the product. unsold products are mostly taken back by HUL. Conclusion: HUL has more effective and efficient distribution network as compared to P & G. 58 .

Conclusion: There is hardly any differences is the performance appraisal methods in both the companies .Conclusion: I found that both the companies take back the unsold product however P & G is more flexible in returning the damaged product as compared to the HUL. however both the company were not willing to disclosed any changes 59 .both the companies are taking almost the same measures and same parameters for performance appraisal . The supervisor keeps track of the performance of the employees and based on their performance he choose the right method of performance appraisal. the main method of performance appraisal that have been adopted by Hindustan Unilever limited are 360 degree appraisal and supervisory appraisal methods. Hence P & G is more flexible here. it is done as an early exercise and performance appraisal parameter is the past performance of the employees. Procter And Gamble: the performance appraisal system in Procter and gamble is also done under the supervisory officer and almost same method are used as in the HindustanUnilever limited. PERFORMANCE APPRAISAL SYSTEM Hindustan Unilever Limited: The performance appraisal system in Hindustan Unilever Limited is done under the supervisory of the Appraisal supervisor.

Every channel member has to fulfill there given targets. Channel members get credit period of 30 days. HUL has also made changes in commercial terms intended to increase the sales in different channels and also to increase profit margins to company. TARGETS: Hindustan Unilever Limited: HUL has different channel members with specified targets and they are intended to increase sales. There was also change in performance appraisal system during 2003-2008 to improve sales.both of the companies said that there have been change in some areas and which has shown positive results. Every channel member gets credit period of two weeks. Procter & Gamble: P&G also has different channel members with specified targets and they are intended to increase sales . channel members expect the company of ROI.brought in performance appraisal system during the past five years . The channel members expect ROI depending on there knowledge and on there performance to.P&G also made changes in channel members during 2003-2008 to increase sales of the company. HUL has also made changes in channel members during 20032008 to increase sales of the company. Payment terms of P&G are also flexible to the channel members and P&G also has flexible payment terms P&G 60 . but not willing to give any reasons and what changes have been brought.

HUL also sets targets to there channel members and provides very less margins to dealers compared to P&G. SALES FUNCTIONING: Hindustan Unilever Limited: HUL is emphasizing on rural areas through project Shakti these days and sales also have been increased and HUL does not have any sales outlets HUL assigns sales territory to there sales persons according to there skill and experience and assigns targets to them. but HUL runs some monopoly over the market by offering a credit period of only two weeks where as P&G offers credit period of 30 days. Sales personnel are motivated through incentives and promotions. parameter used is performance of the sales personnel.also offers many discounts to these channel members. Performance appraisal of sales force is done by appraisal supervisor and it is done through 360 degree appraisal method. HUL adopts on the job and off the job training system to there sales force it is emphasized on improving skill and experience of the sales personnel. P&G'sS alesT ets arg 35% 30% Flexibilitym ore Credit lim m it ore Dealer'sMargin m ore 35% Conclusion: Both HUL and P&G are flexible to channel members. Procter and Gamble: P&G has increased the number of outlets in the country and the population in the area also increased and there is no effect on sales. P&G sets targets to there sales force on 61 . P&G has made many changes to there commercial terms during 2003-2008 to increase sales.

P&G trains their sales force by on the job training and training process is emphasized on skill and experience. P&G motivates their sales force by providing them with targets and incentives.the basis of increase or decrease in demand and also according to the previous sales . responsibility of the sales personnel is to clarify the doubts of the customer and make sales of the product. P&G does appraisal on a monthly basis depending on increase and decrease of sales where as HUL does it once in a year. P&G has also brought many changes in the training system that has affected its sales too. sales territories are assigned according to the capabilities of the sales personnel. Conclusion: Both P&G and HUL trains their sales force and has a good performance appraisal system. 62 . Performance appraisal of sales force is done by the manager by doing meeting with them parameters of appraisal is increase or decrease in sales it is done on monthly basis.

At present they are currently doing their CSR in southern India. Undertaking several initiatives for traditional channels in order to improve its capabilities at the front end by developing skills for stockists' sales force. So they should increase their presence. Both companies should emphasis their business in areas. 63 . HUL and P&G should open exclusive shop. The employee should be given uniforms in which the name of the company should be printed. They should increase their CSR activities in northern India. Both the co. by doing this the sales people get motivated. 73% of the Indian population lives in rural areas.. But it is only in India so it should be increased. It adversely affects the opinion of the customer and it results in decrease in sales. They should offer 24 hours free home delivery system. It was heavily criticized because it was not fit with the brand. Both these companies should concentrate on rural areas.CHAPTER 5 RECOMMENDATIONS Both the companies having good market share in India and it keep on increasing. P&G has been hardly been seen in the rural areas. HUL is already having exclusive shop in Mumbai called SANGAM STORE. Leveraging scale and building expertise to service Modern Trade and Rural Markets. So they should increase their activities in north India also. The companies should emphasis on its advertisement. i.e. there should be BRAND FIT in that. They should penetrate their business in the rural areas. The delivery vehicle should be attractive the name of the company should be printed in that so that it becomes the sources of advertisement. For example when lux launch its advertisement in which Sharukh Khan was with girl. There is huge market there and very less market has been penetrated. Recommendations to Improve the Distribution Network of HUL: • • • • Servicing Channel partners and customers with continuous daily replenishment. Delivering of sales force to improve response times and service levels. These shops should be opened for 24 hours.

it has started the ‘Vijeta.Rishta Jeet Ka’ scheme last year to provide a platform for the wholesaler and HUL to grow the business by earning points and redeeming them. 64 . For instance.• Launching of several promotional schemes for existing wholesalers and distributors.

40 years 41.CHAPTER6 ANNEXURE COMPARATIVE STUDY OF DISTRIBUTION CHANNEL OF ‘HUL’ AND ‘PROCTER & GAMBLE’ IN RURAL MARKET Customer Survey Questionnaire Disclaimer: The data collected by the following questionnaire is purely for academic purpose. How many members are there in your family? Q2. Are you using any of following products? ____ ____ ____ ____ 65 . Have you ever heard of HUL (Hindustan Unilever Limited)? YES ___ NO ___ Have you ever heard of P&G ( Proctor & Gamble)? YES ___ NO ___ If Yes.25 years 26 . from where? Newspaper Magazines Television Others _______ Q3. Name Age 15 .30 years 31 .35 years 36 .50 years ___ ___ ___ ___ ___ ___ Place Contact Proffesion Salary Q1.20 years 21. and not for any further commercial or personal use.

If yes. then are you satisfied? YES NO CAN’T SAY Q5. then reason being Poor quality No services High prices Others 66 .____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ Q4. If No.

Q6. Which brand do you use in the following categories Personal Wash BRAND 15gms LUX DOVE BREEZE LIRL BREEZE LIFEBOUY PACKAGING 25 gms 50gms 85gms 100gms Laundry BRAND 50gms SURF EXCEL WHEEL TIDE NIRMA ARIEL DAWN 150gms PACKAGING 250gms 500gms 1 Kgs 5Kgs Skin Care 67 .

What Recommendations or suggestions would you like to give for Improvement of our products? 68 .BRAND 50gms Fair n Lovely cream Pond’s cream Olay cream Lakme moisturizer PACKAGING 75gms 125gms 250gms Oral Care BRAND 50gms Pepsodent Close Up Crest PACKAGING 75gms 125gms 250gms Deodorants BRAND AXE REXONA LAKME Color Cosmetics BRAND LAKME OTHERS Q7.

69 .

Agency  4). NAME: ___________________ NAME OF THE SHOP____________________ VILLAGE_____________ TEHSIL_________________ DISTRICT_____________ CONTACT DETAILS ___________________ 1. Wholesaler  70 . lack of demand c). (If the answer is yes then go to question number: 3 ) 2. and not for any further commercial or personal use.Yes ……. Why don’t you keep the products of HUL and P&G in your shop or why did you stop keeping its products? Yes No a). Dealer  3). low margin d). no supplier e). b). Do you keep products of HUL and P&G in your shop? ( please tick mark on the appropriate answer) a). erratic supply b). No ………. Distributor  2). don’t know about the company 3. From whom do you purchase your product? 1).COMPARATIVE STUDY OF DISTRIBUTION CHANNEL OF ‘HUL’ AND ‘PROCTER & GAMBLE’ IN RURAL MARKET Retailer Survey Questionnaire Disclaimer: The data collected by the following questionnaire is purely for academic purpose.

15/Rs. 2) Three wheeler  3) Four wheeler  a) Van__. 30/Rs.30/SALES ( per week) Laundry 71 . b) truck__. 5.4.60/Rs. 7/Rs. 3. Excellent Above Average Average Below Average Extremely Poor      5. How many dealers are there in the district? a). d) More than three. b) motorbike__. scooters__ . 45/Rs. Two wheeler  a). c) others__.20/Rs. 4. 25/Rs.35/Rs. 8.35/Rs. Which vehicle do they mainly use for delivery? 1). c) Three.One b) Two. 20/Rs. 15/Rs. 25/Rs. 10/Rs.     6. What are the other schemes and incentives offered by them? ___________________________________________________ ___________________________________________________. 7. Which of the following products do you keep? Personal Wash BRANDS PACKAGING Lux 50gms 85gms 100gms Hamaam 50gms 85gms 100gms Dove 50gms 85gms 100gms Lirl 50gms 85gms 100gms Breeze 50gms 85gms 100gms PRICE Rs. How do you rate the delivery process by the dealer? 1. 2. 15/Rs.

120/Rs. 75/Rs. 75/Rs. 45/Rs. 75/Rs. 150/Rs. 22/Rs. 15/Rs.150/Rs. 50/Rs. 40/Rs. 25/Rs. 450/Rs. 35/Rs. 30/Rs. 25/Rs.150/Rs. 245/Rs. 250/Rs. 10/Rs.150/Rs.70/Rs. 35/Rs. 45/Rs.BRANDS Surf excel Wheel Tide Dawn Rin powder PACKAGING 250gms 500gms 1 kgs 250gms 500gms 1 kgs 250gms 500gms 1 kgs 250gms 500gms 1 kgs 250gms 500gms 1 kgs PRICE Rs.500/SALES ( per week) Oral Care BRANDS Pepsodent Close up Crest toothpaste PACKAGING 50gms 75gms 100gms 50gms 75gms 100gms 50gms 75gms 100gms PRICE Rs.70/Rs. 45/Rs. 75/Rs.50/Rs.40/- SALES ( per week) Skin Care BRANDS Fair n lovely cream Pond’s white cream Lakme fruit moisturizer PACKAGING 125 ml 250 ml 500 ml 125 ml 250 ml 500 ml 125 ml 250 ml 500 ml PRICE Rs. 50/Rs. 90/SALES ( per week) Deodorants Axe ________ Lakme ________ 72 . 10/Rs.

73 .Rexona ________ Colour Cosmetics Lakme ________ Others ________ 10. What improvements would you like to have in the distribution process? ___________________________________________________ ___________________________________________________.

Dwayne D Gremler.Integrated customer focus across the firm. Journal of Management in Engg.CHAPTER 7 BIBLIOGRAPHY  Dana-Nicoleta Lascu. Anand Godase: Supply chain management – A conceptual framework: Page 313-219. 1995. Managing Worldwide Operations in a Changing International Environment.Benchmarking: Search for industry Best Practices that lead to superior performance.  Philip Kotler. Operations Management.F. A.A)  Gopal Iyangar.(1989). 74 . (U. Greg Frazier. Wisconsin. Cengage Learning publications. Ajay Pandit. 9th Edition. International Marketing. Services Marketing. pp 73-82. Special India Edition. Milwaukee. pp 179-297. Biztantra Publications. Marketing Management. (1996). 2nd edition. Law of Insurance. Performance indicators in Distribution. Edition (2006).  Avtar Singh. ICCQM Journal.C.and Price.D. 7(1). Indian Edition. Eastern Book Company. ASQC Quality Press. 11th Edition. May2002  N. International Journal of Logistics Management.R. M Krushnakumar. 4th edition.M.S. Prentice hall –India publications. pp1-31.11(1).  Valarie A Zeithaml. Benchmarking: Performance improvement towards Competitive advantage.  Norman Gaither. pp 183-236  Camp.. Mary jo Bitner. Tata McGraw-Hill Publications New Delhi.28-37  Ploos van Amstel and Guideo D. pp 229-265. pp 180-213.

Vol. Published by Harvard Business Press. 2007-08-02.” The Brave New World of Supplier Relationship LeHong (16 October 2002).” Spencer (19 October 2001). (2004). Poluha: Application of the SCOR Model in Supply Chain Management. Retrieved 2008-05-01  Rolf Youngstown. 7. 254 pages. Lora Cecere.D.CHAPTER 7. 17-31. 2007  2015". Greenpeace. Retrieved 2007-08-02.  Cathy Management”. ISBN 1934043230. Gilmore (1999).  Larson. The Experience Economy: Work is Theatre & Jimenez.  Gill Mander (11 October 2002).  "Monsanto.”Square Soup Helps Squeeze Air Out of the Supply P.  Hung Chain”.  Hindustan Unilever agrees to withdraw lock out. New York 2007. Issue 1.”Understand What’s Driving Your Retail Demand Every Business a Stage.  Unilever admits toxic dumping: will clean up but not come clean". A. international survey. Karen Peterson and Frank Buytendijk (23 May 2001). James H. 75 . India Committee of the Netherlands.  Maria Measuring Collaborative Supply Chain Effectiveness”. Logistics versus supply chain management: an Chain”.1  B. Retrieved Unilever use Child Labour in India". Domdooma factory to reopen Assam "Unilever has announced its intention to have all of its palm oil certified sustainable by G. REFERENCES Joseph Pine. and Halldorsson. International Journal of Logistics: Research & Application. Times 2 September.

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